Know Your Customer (KYC) is acompliance procedure initiated by the Reserve Bank of India (RBI). The primary purpose of this compliance isto assess the customer risk and comply with the legal requirements of the AML (Anti-Money Laundering) laws.
Carrying out an effective KYC is all about knowing a customer's identity, the risk that they pose, and their financial activities. There are several documents required for a customer to complete their KYC process.
We will discuss more about the documents required for KYC for an Indian citizen, the type of KYC verification process one can consider, the submission procedure and more.
Why Are Documents Required for KYC?
TheReserve Bank of India initiated the KYC process as a part of compliance with the Prevention of Money Laundering (PML) Act and rules. TheRBI introduced this process in 2004 and instructed all financial institutions to make KYC compliance mandatory for all their customers.
The prime objective behind introducing the KYC documents for banks and other financial institutions is to ensure that all the financial transactions are carried out legally and comply with the anti-money laundering norms.
Moreover, KYC compliance also enables the authorities to track bank accounts that carry out malpractices, financial frauds, and transactions associated with terrorism funding, money laundering, or any other illegal offences.
List of Valid KYC Documents
Here is thelist of valid KYC documents that would be required to be provided to the respective authoritiesfor completing the KYC process:
- Proof of Identity (Any one of the following documents)
- Aadhaar card
- Passport
- Driving licence
- Voter ID
- PAN card
- Photo ID cards issued by the Central or State government entities, public financial institutions and public sector undertakings
- Proof of Address (Any one of the following documents)
- Voter ID card
- Driving license
- Passport
- Utility bills, such as water bill, electricity, gas bill, or telephone bill (not older than one month)
- Ration card
- Rental agreement
- Sale deed
- Passbook or bank statement containing the address
What Are the Types of KYC Verification Processes?
There aretwo types of KYC verification processes, and both are equally authentic and effective. It entirely depends on the level of convenience the applicant wants to avail. The types of KYC verification processes are as follows.
Online KYC or e-KYC
Thee-KYC or online KYC is a verification processconducted online and can be convenient for anyone accustomed to internet connectivity devices such as a smartphone, tablet, laptop, or desktop, or those who cannot travel due to age, disability or health concerns. For this type, you must upload a scanned copy of your identity proof and address proof or produce your documents through a video call (Video KYC) to complete KYC.
In Person KYC
The KYC verification process is carried out offline in person. You can do this byvisiting the bank, regulated entity or financial institution in person orvisiting your nearest KYC kiosk to verify and authenticate your biometrics and KYC documents. Nowadays, banks and financial institutions also send a KYC executive to your place to conduct in-person KYC verification.
How to Submit the Documents Required for KYC to the KYC Registration Agency?
The documents for KYC that are required to be submitted to KYC Registration Agency (KRA) can be done using online and offline mode.
Online or e-KYC
Here is theprocess of KYC document submission or KYC verification to theKRAusing the online mode:
- Simply visit the official website of the KRA (KYC Registration Agency).
- Log in to the website using your mobile number.
- Scan the required documentsand upload them in their respective field.
- Accept the terms and conditions and confirm the above-entered details to complete the process.
Offline or in-person KYC
Here is theprocess of KYC document submission or KYC verification to theKRAusing the offline mode:
- Download the ‘Know Your Customer’ application form.
- Fill in the necessary details, such as your Aadhaar number, PAN number, etc.
- Visit your nearest KRA (KYC registration agency) office.
- Submit the duly filled KYC form along with the attached address proof and ID proof.
- Complete the biometric process if necessary.
Know Your Customer (KYC) is a compliance procedure introduced by the central Bank of the country. It was initiated to bring all the consumers of financial products under the anti-money laundering regulations. There are plenty of instances of money laundering that have come up and have given rise to a number of illegal trade practices. Thus, KYC verification was introduced to prevent such practices.
However, you must also be cautious regarding the ongoing scams and frauds in the market. Stay away from harmful or malicious sites on the internet, which can also result in financial scams in the name of KYC.
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FAQs
KYC process includes ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification.
What are the documents required for KYC? ›
KYC Documents Individuals
- Passport.
- Voter's Identity Card.
- Driving Licence.
- Aadhaar Letter/Card.
- NREGA Card.
- Letter issued by the National Population Register containing details of name and address.
KYC process includes ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification.
What documents can be used for KYC verification? ›
Some establishments need two kinds of identifying KYC documents, such as a:
- Passport.
- Social security card.
- Driver's license.
- Voter's identity card.
A Know Your Customer (KYC) document refers to formal documentation such as a passport or utility bill, which can verify the identity and address of a customer. Requesting and verifying KYC documents is a mandatory part of customer due diligence for regulated entities.
What is the documentation process of KYC? ›
What is the step-by-step process for KYC online verification?
- Visit the official website of KRA (KYC registration agency).
- Login to the website with your your registered mobile number and enter the OTP received on your mobile.
- Make a self-attested copy of your e-Aadhaar and upload it.
- Accept the terms and conditions.
Customer Due Diligence Requirements in the UAE
The key elements of KYC requirements include identity verification, understanding the business and purpose, ongoing monitoring, and updating of information.
What is a KYC checklist? ›
Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures are crucial for safety and security. KYC checklists verify client identities, while AML prevents money laundering. Therefore, a comprehensive KYC system is essential to prevent crimes, comply with regulations, and maintain a good reputation.
What are the 4 key of KYC? ›
Understanding the intricacies of KYC rules and regulations is crucial for any institution that handles financial transactions. These regulations can seem complex, but they're based on four primary principles: Customer Identification, Customer Acceptance Policy, Transaction Monitoring, and Risk Management.
What is KYC required to verify? ›
Know Your Client (KYC) is a standard used in the investment and financial services industry to verify customers and know their risk and financial profiles. Three components of KYC include the customer identification program (CIP), customer due diligence (CDD), and enhanced due diligence (EDD).
KYC includes knowing an individual acting on behalf of an organization
- Full legal name.
- Date of birth.
- Current residential address.
- Social security number or other government issued identification number.
Best practices for KYC onboarding due diligence typically begin with these five steps:
- Step 1: Customer Identification Program (CIP) ...
- Step 2: Customer Due Diligence. ...
- Step 3: Enhanced Due Diligence. ...
- Step 4: Continuous monitoring. ...
- Step 5: Reporting and compliance.
KYC documents include an Aadhaar, Voter ID, passport, etc., which acts as proof of identity, and an Aadhaar card, Voter ID, utility bills, etc., that can act as an address proof along with a PAN card and a recent photo.
What is an example of a KYC requirement? ›
KYC requirements vary depending on the sector, jurisdiction, and the customer's risk profile. However, some of the most commonly accepted KYC documents are ID cards, passports, driving licenses, utility bills, bank statements, and credit card statements.
How many types of KYC documents are there? ›
Know Your Customer (KYC) verification can be done in a time-saving and cost-effective way via several channels. These channels range from paper-based, Aadhaar-based, digital, offline, video, and Central KYC.
What should be included in a KYC form? ›
KYC includes three main parts: customer identification, customer due diligence, and ongoing monitoring. These three program prongs are meant to identify the potential for and prevent financial crimes like drug trafficking, money laundering and terrorist financing.
What are the standard KYC documents for companies? ›
The following documents must be provided for KYC for public or private limited companies:
- Certificate of incorporation (with CIN)
- Memorandum & Articles of Association.
- PAN of the Company.
- Resolution of the Board of Directors for account opening.
- A list containing names of officials authorized to operate the account.
Financial institutions start the KYC process by asking customers to provide a range of basic information about their business operations and individuals. It includes the names of the company's directors, business addresses, national insurance or social security numbers, company numbers, and so on.
What information does KYC require us to obtain and record? ›
KYC in the banking sector requires bankers and advisors to identify their customers, beneficial owners of businesses, and the nature and purpose of customer relationships.
